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Squawk on the Street

News/Business. Melissa Lee, Carl Quintanilla, David Faber. Opening bell market action. New.

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Us 30, Carl 18, U.s. 17, S&p 16, China 13, Washington 13, New York 12, Mastercard 10, Alabama 9, America 7, Sandy 7, Geico 7, Usaa 6, Citi 6, Macy 5, Toyota 4, John Harwood 4, Louisiana 4, Hawaii 4, Cliff 4,
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  CNBC    Squawk on the Street    News/Business. Melissa Lee, Carl Quintanilla,  
   David Faber. Opening bell market action. New.  

    December 26, 2012
    9:00 - 12:00pm EST  

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just written based off something the economist robert gordon said, that basically the last 200 years have been the exception. rick said the preceding 1,000 years, mankind went nowhere. we've had this great explosion. robert gordon posits that maybe we're returning to the previous stagnation. worth reading. >> thank you for spending three hours with us. >> thank you. >> i would think all the technical -- it's different this time. i know you've never heard that before. i have a very special announcement, once again. i want to say happy birthday to blake hernon, who is now officially a teenager. 13 years young. >> he'll be voting democratic in five years. >> absolutely. >> "squawk on the street" starts right now. happy birthday, blake.
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good morning. welcome to "squawk on the street." hope you all had a good christmas. i'm melissa lee. we're live from the new york stock exchange. jim cramer has the day off. the latest s&p schiller home price report has been released. the results being shown at the bottom of your screen. david blitzer will join us with a closer look at the numbers in just a few minutes. let's get a check on how we're setting up on this day after christmas trading session. the dow looking higher by about 15 points. s&p looking at about two points at the open. european markets closed on this day after christmas. the uk and france among those celebrating foxing day. we start off with, what else, retail. dips in spending in the mid-atlantic and northeast regions. luxury sales also weak. >> we're coming off the worst christmas eve for the dow since 2006. as the president cuts short his hawaiian vacation to deal with the fiscal cliff, just five days to go until we go over.
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>> threatening both coasts with workers snubbing up best and final contract offer. >> and more on the home front. we'll have more on the data and whether it can keep one of the best performing sectors of 2012, home builders going in 2013. >> data showing what some experts say is the slowest growth in spending since the 2008 recession. according to mastercard, spending polls units through christmas eve, retail sales rose just .7% from the year before. the national retail federation says it is forecasting a 4% jump in sales. we'll continue to get trickles of data as we progress through this last week. it is still an important week, the final week before the new year in terms of retail sales for these guys. >> historically positive the last five days of the year and blends into the first couple of days of the new year. generally get a nice year-end effect. we'll get claims tomorrow. new home sales tomorrow.
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chicago pmi on friday. but this idea that retail is soft, was it the fiscal cliff? was it sandy? was it some sentiment that came out of the newtown tragedy? it's hard to say. >> but it may be a combination of all of those. we got a sense from the guests we brought on earlier this week, on monday, that it was not a great holiday selling season, as we ended the last day before christmas. and all those may be the reasons, carl. i'm positive i didn't think people really understood the fiscal cliff. i may have been wrong. perhaps it was something that weighed on people's minds. the weather always at issue. it could actually have been warmer weather as well that contributed. we've had some analysts say that because people don't feel they have to go out and buy a coat. >> because it will never get cold again. >> except today, when it's 28 degrees. we'll see how after christmas does. internet also, it doesn't appear as online sales are up as p as
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anticipated. and perhaps they made up for the loss of the brick and mortar. >> you were pointing out before the show, luxury was not immune to this. you would think it would be more in tune to the consequences a cliff. >> you can take a look at the mid-atlantic and northeast regions, those regions account for 24% of national retail sales. within luxury, a big portion of that 20% is in the heast region. and so when you have that sort of double whammy, sandy, newtown shootings, fiscal cliff, all these things can combine to depress shoppers' appetite to spend at this point. >> we'll talk a lot more over the next couple of hours where the discounts really came. there's a lot of talk about walmart and gap, and macy's and target. and then what that's going to meet as they try to clear out all this inventory, really starting today, going into the first part of the new year. those things have to get off the shelves. and that's going to affect
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margins one way or the other. >> let's bring in jackie deangelo, crunching the numbers back at headquarters. >> i'm going to recap what you said a little bit earlier. according to mastercard's spending poll, the few weeks leading up to christmas rose only .7%. a pretty big miss there. to give you perspective, after a drop of 5.5% in 2008, holiday sales have seen a steady rebound since then, including a 2% increase last year. this less than 1% figure, bound to be disappointing. online shopping also showed some muted results. spending polls show web sales were up 8.4% from last year, but that number doesn't stack up to the double digit growth we've seen in that segment over the last few years. what's to blame for the dismal holiday sales? hurricane sandy was definitely one factor. experts say shoppers in the northeast probably bought less and used their money for storm repairs, then, of course,
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there's the uncertainty created by the fiscal cliff. >> they took the psychological factor into the mix. you know, at first it didn't look like it did. but consumers respond two weeks before a deadline happens. it's like they didn't get caught up in it during the thanksgiving rush, they got caught up in it at the very end, when it hurt most. >> nothing like a pending tax hike to take the wind out of your holiday shopping sails. don't forget, we've got a few days after christmas here where these are still in play. consumers are going to use those gift cards when they head out to make returns. of course, remember, those revenues are booked when the gift cards are redeemed, not when they were purchased. and there's a chance you're out returning things, that maybe you'll spend a little bit more. we'll watch the next few days closely as well. guys, back over to you. >> jackie, early morning already. thanks for sticking around. so who were the retail winners and losers this holiday season? rick beamer is the founder of the america research group, a
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leading consumer behavior and marketing firm. good morning. >> good morning. thank you very much for having me. merry christmas. >> same to you. we're tossing around all these theories. this is a significant mist here. what's to blame? >> let me cover your point that you just mentioned. number one, only 8.5 consumers said that the fiscal cliff impacted their sales negatively. only 45% of consumers are even following it. now, sandy was another issue. 16% of consumers in the northeast said that sandy impacted them. so that is a significant fark tor. the other issue is, luxury was impacted because this year corporate america held fewer christmas parties than in the past, because they didn't want to be able to broadcast their largess and all their activities. keep in mind, 40% of retailers driven by the corporate christmas parties, when they were cut back, it affected the
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shoppers who were buying the holiday dresses and jewelry. >> so is this -- i mean, if you're looking for the true source of pain here, brit, in the trade, is it discounters? is it luxury? where are we going to notice this miss the most? >> well, what happened this year is, before the season started, 74% of consumers said they were redig to avoid their credit cards as much as possible. so when you look at the winners this christmas, you look at walmart, you look at sam's, you look at big lots, you look at amazon, and look at the people that really did well this christmas, you know, and dollar tree, think about that. you've got a discount store, warehouse club, dollar store, and amazon, those are the five big winners. they kept over 75% of their customers at home. on the other hand, those retailers that lost, which were the barnes & nobles, and bjs, costco, the gap, retailers like that, and lowe's, those retailers did not do a good job.
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keep in mind, someone like costco, which is now expanding their business model into the business community and small businesses, they can give up some consumer business and do very well. but look at the troubles that barnes & nobles and bj's has, they lost over half their customers. >> i'm a consumer at home, it's the day after christmas and i'm thinking, are there going to be great deals. because of the weak data we've seen so far through christmas eve, can we then extrapolate that the stores are now going to be more pressed to mark down items in order to move them into the new year? >> i wish i could say that. when i looked at the ads in the sunday newspaper where i live here in orlando, there was nobody cutting prices dramatically. here's the problem, retailers at this level are publicly held. they're much more concerned about wall street than main street, more concerned about their earnings than sales. what happens is, nobody really changes their advertising plan. so what they're doing is
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following this and they're going to adjust in january. if sales are not good in december, they've still got january clearance to wipe the slate clean. here's one of the issues. they've got to be able to keep those stores empty, so when president's weekend comes, when they put the spring merchandise out there, because they want to have their spring merchandise on display. >> that's not far off. rude awakening this morning. appreciate your time very much. thanks. >> thank you so much. merry christmas. >> same to you. on to the fiscal cliff this morning. the president cutting his vacation short in hawaii. the president plans to leave for washington tonight. congress expected to return on thursday. president, guys, not expected to actually arrive in washington until tomorrow morning. no talks scheduled that we know of as of yet. all the attention's going to turn to the senate, which tends to be more of a compromising body than the house is. >> yes. and the president is available
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in person if you should want to go over there and visit with him. or perhaps if he wants to visit with anybody else. the consensus seems to be if you get some sort of a deal, it's obviously not going to be the big deal. it will simply be something that extends the tax cuts for the vast majority of americans, at least those earning less than $250,000 a year. the consensus seems to be, carl, that if we don't get a deal by the second or third or fourth week, the super bowl week, we'll start to feel it in the economy. >> we had a notable sell-off. there is typically a bias on christmas eve, but the worst christmas eve performance for the dow since 2006 because of the jitters about the fiscal cliff. it will be an interesting few days as congress starts to reconvene. and also as corporate america is taking up this fight as well. ceo howard schulze of starbucks urging workers at 120 washington area stores to start writing on
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their coffee cups, come together. >> are you serious? >> yes. yes. >> that should help. i think that's going to do it. >> problem solved. >> between that, and the pins. >> i never thought of that. >> can you imagine -- oh, good idea, howard schulze. but he says we deserve better. >> we probably do. >> he's right. >> a lot of them are still on vacation. house members have been told there's nothing scheduled for this week. but you could be called back with 48 hours' notice. so, in a perfect world, things could possibly come together. >> 48 hours' notice and we have five days to go. >> i'm not saying we're not cutting it awfully close, but that's where things stand as of right now. >> new new housing data out tod home prices rose 4.3% in the 12 months ending in october in a 20-city composite, beating analysts' forecasts. it did appear as 12 of the 20 cities in both composites posted monthly declines in october.
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david blitzer will join us in just a few minutes to go over this data. bottom line here, better than expected. maybe this is enough to keep this sector going. a very strong sector in consumer discretionary overall. home builders have really been a double in 2012. >> it wasn't until the second half of this word that you started hearing the words housing and gdp growth in the same sentence. perhaps the most significant part of the economy for so much of the early parts of the 2000s. we'll see. they do call it a sustained recovery. that is, s&p-case schiller, and the recovery continues to gather strength. >> the best performing sector, though, financials. >> financials, yeah. >> 26% on financials. utilities the only one lower for the year. nine out of ten s&p sectors
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higher. that doesn't happen a whole lot. >> no. >> when we come back, christmas day may be over, but we've still got blitzer. s&p's david blitzer breaks down the winners and losers. also, facebook's rally sign of things to come? stick around for predictions. kind of choppy today, as the markets watching for any sign of progress as the president comes back to washington. a lot more "squawk on the street" in just a moment.
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let's get back to the key housing data out this morning. home prices rose 4.3%, after the 12 months that ended in october. that was ahead of what analysts had been forecasting. here first on cnbc is david blitzer, chairman of the s&p 500 index committee. david, you talk about a sustained recovery in housing, of course. month-to-month, september to october don't look as impressive as year over year. >> i think recovery is sustaining itself in the third quarter. housing added the gdp. every reason to believe that will continue in the fourth quarter, and into next year. as you point out, the month-to-month figures look a bit weaker, strictly because of the seasonal housing patterns.
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winter tends to be a slow period. the seasonably adjusted numbers from september and october, october was actually a good deal better than september. >> a lot of the markets that saw the biggest busts are now seeing, i don't want to call it a boom, but certainly significant price increases, aren't they? >> without a doubt. phoenix has got 13 consecutive months of rising prices. it's up over 20% over the last 12 months. las vegas, i think, was up about 2.8% this month. so there is a lot of strength in some of the previously horrendously weak spots. southern california is another area that had been hard hit. it definitely rebounded. >> at the same time, david, some of the cities that had, you know, fair to best during the downturn are now showing some weakness, chicago and new york, the only two cities with negative returns in the month of october. what's going on in those two markets? >> well, i think the first thing to recognize is what you pointed out.
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they didn't have the incredible boom going on. so they've been a lot more classic. those are markets where i think there are some other concerns related to local economic base. new york is highly dependent on financial services. and financial services, despite the stock market, have not been doing as well as they might. and have seen a lot of slowness. and rumors of layoffs. so there are areas that are a bit weak. even with those, i think on a national basis housing continues to be very solid. >> would you anticipate, david, seeing any sort of impact in sort of a higher income areas, in states, california, the northeast, because of the fiscal cliff? do you think that's going to show up eventually in the data? >> actually, i think the bigger thing that's likely to show up, especially in the new york metro area, is really a question of what seasonal bonuses look like.
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traditional issue for new york city area has always been how good the bonuses are, if they're real good people go out and buy slightly bigger houses than they had expected to previously. i think that's a bigger item than the fiscal cliff. the long-term question about taxes is clearly the mortgage deduction. given they haven't even got to the headline items for the fiscal cliff, they won't get to the mortgage deduction for a few weeks, if not longer. >> finally, david, shadow inventory. we hear a lot about it, talk a lot about it. it doesn't seem to be the concern some anticipated, at least when we go back to 2012, 2011 to current. >> to some extent on a national basis, i think the shadow inventory story is a little bit overdone. i think it's gradually being worked off. foreclosures have been -- or the number of homes in foreclosure have been declining in the last several months and i think are likely to continue to decline. localized areas it can be a big problem, but nationally, i think
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it's a little bit overdone and a bit overstated. >> david, we're going to leave it there. david blitzer, s&p's managing director of the s&p 500 index committee. >> thank you. >> who will be celebrating the day after christmas? the bulls or the bears? the traders' take ahead of the opening bell. a port strike is looming. we'll ask retail federation matthew shay about the billions of dollars that could be at stake. plus, what he thinks of the holiday retail numbers. let's look at the futures as we head to the opening. [ male announcer ] how do you trade? with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor,
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nice round of applause for the new york national guard. they'll help ring the opening bell in a moment. the group that responded to hurricane sandy, more than 4,000 soldiers and airmen total. and they're visitors today. we can't wait to see them ring the bell in a few molts. >> great group. good work. about 6 1/2 minutes until the bell rings. gordon, what should we expect today? or this week for that matter? >> i think this week we'll sort of gear up to what's going to be the resolution. i don't think the president is coming back from hawaii without anticipating we're going to get something done. i'm optimistic. i think the street is somewhat optimistic, too, because you don't get a sense that they're selling into sort of the pessimism that people are trying to circulate about the fiscal cliff not being resolved. closing a lot of markets today, so i think, again, we'll be
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looking at muted volume. but i think that you're looking at a scenario where investors are not unconfident that something will resolve. that this isn't something that's out of control that's going to careen out of control. and that a lot of the indicators are still ultimately looking up. there's growth in the economy. obviously it will be spurred once they resolve this thing. but i don't think we're sort of at a watershed moment, frankly. >> you mentioned muted volume. is it higher, though, than typical weeks of christmas? on monday we had the worst christmas eve for the dow since 2006. i'm just curious what the backdrop was for that, as well as for today's session. >> i think it's going to be a wait-and-see session today. when you couple that with the fact that some of the other exchanges are closed, is a holiday week -- >> it will be lower than expected? >> yeah, you can even see it now as we're looking at some of the opening balances here today. entirely unremarkable on the
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list. >> no deal on the fiscal cliff. let's say not even the small deal that perhaps the market is expecting. when do we start to see that play out? does that play out prior to new year? or do we wait until it actually passes? >> i think it goes past the new year day. it seems they're going to come up with something, even if it's a short-term fix, band-aid if you will. this thing is just not going to get into a sort of hysterical mode, where say the tea party is running the whole thing. and you just have this sense that they will not negotiate. i think that moderation will be the order of the day. the incumbents know what's at stake. they want to keep their positions in washington. they're going to do what politicians do. wheel and deal and get a deal done. >> i'm picturing lucy with a football here, gordon. but we will see. that's the old saying. >> yeah, well, listen, carl, the fact of the matter is, i'm down here on the floor and i'm trying to give your viewers a sense of what we're seeing from the investment community.
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and i'm not seeing a sense of panic, or a sense of urgency that there's going to be some sort of systemic problem that's going to cause a massive retracing. >> all right. gordon, thank you. >> as we said earlier, 2012 has been a good year for retail stocks. which names in the sector are set to stand out in today's trading. get ready for the opening bell. that's coming up next.
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...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ you're watching "squawk on the street." the opening bell ringing here on wall street. take a look at the podium. the new york national guard doing the honors hee today. we welcome them to the new york stock exchange. the u.s. marine corps providing toys for less fortunate children for the holiday season. another good cause there.
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stocks opening up for the first day after the christmas holiday. most major stock markets around the world were closed for christmas, and for the day after christm christmas. china, five-month high on the notion that the urbanization plan will gain spurs in the housing stocks there. japan, abe confirmed as prime minister there. the seventh prime minister in the past six years. we did see the yen hit a 20-month low against the u.s. dollar. notable lows against the euro as well. the topics in the nikkai the lowest in nine months. >> going back to his old job, that he had back in 2007. strange in and of itself. i wonder how long it will take for people to start talking about netflix after the outage going into christmas eve on social media. they were calling it no flix. and to blame amazon web
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services, which is one of their huge growth engines. a unit of the company they say is probably a tenth of its eventual size. >> one of the highest growth parts of amazon right now, the web services portion. their amazon is down 1.25%. i don't know if that's the reason. but it was the streaming center in northern virginia that was the source of the netflix outage. it's resolved, though, as far as we know. we don't know what sort of impacting -- >> i waste a vin't a victim, bu sure a lot of families get together to watch something on christmas eve. that's the point, get ready for peak demand. >> it is. this is not the first time that that amazon has had some issues. we'll see. your point is well taken. of course, another part of the growth leg, important part of the growth part of the amazon story. as for netflix, we're watching that stock down ever so slightly, half of 1%. it's had an enormous run over the last few weeks since it
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signed that deal with disney, a deal that in many ways converted legitimacy among those making decisions in the media sector. score that one a win. >> definitely. we mentioned the rally in china on this notion that urbanization will help there. when you think of china gaining, and making notable gains, you automatically go to the copper stocks, mining stocks here. that's what we're seeing play out in today's session. these are clear outperformers compared to the pretty much flat line that we're seeing across the markets here. >> take a look at some retail names as well. mace yy's in the red. jcpenney, kohl's, hanging on. striking how this mastercard figure of .7 versus an estimate
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of 3 to 4, which is basically for the whole season, it's not this weekend, it's not the past week, it is from late october until basically today, comes as a bit of a surprise. i was listening to talk radio on my way in to work, and it said the holiday season is a bust. i wonder if that will play on consumer psychology. >> we saw consumer sentiment the lowest level in five months. maybe not so much a surprise that there is a little bit of a damper on the holiday season. keep in mind that the last week of december is 15% of sales, too. for the retailers. so this could be a big catch-up week in theory, the last week. we'll see. i don't know if it will play out or the weak sales up to this date will then carry over into this last week. >> we had seen early signs, consumer confidence numbers have been coming down, five-month low. we'll see how much of this gets reaffirmed in the data that is still to come. as we said earlier, there is
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more of it on the way over the next couple of days. toyota's got a pretty optimistic forecast for 2013, looking for growth of about 2%. that would be record sales in large part because of sales in this country. >> north america. that has been -- again, when we talk about this year, which we're going to start to do in earnest over the next few days, we certainly will look at the rebound in auto sales and housing as two key parts of why, at least, there's some -- or a good deal of positive thinking, albeit not including the cliff, when you talk about 2013. >> but if you take a look at the toyota chart from mid-november until now, i mean, really rising in anticipation of abe becoming prime minister, and coming in and enabling policy measures that would stimulate the economy. and weakening the yen. here we have the run-up, even though we don't see the optimism reflected in today's price action. one more stock we want to hit, herbalife, up 3.5%.
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they hired some interesting advisers. >> yeah. this was out on monday, actually, during our show. a well-known investment bank, a guest on this show not very long ago. certainly very credible name. we'll see what they come up with at the january 10th meeting. that's more important than what the company has to say to combat what has been a fierce campaign by mr. ackman. >> they also hired shiller, the law firm. not clear why they would hire a law firm at this point. no reason given. they have hired them, which is another, hmm, wonder what they're up to kind of move. bob pisani is on the floor with what's moving today. >> we're up 24 points in the dow. and a lot of people think a grand bargain is impossible at this point. but president obama coming back from vacation in hawaii. that's an indication that some kind of deal -- however small -- is definitely coming. i want to point out, and i know you've been negative on this
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mastercard data on retail sales, and everybody thinks it's going to be a mess for the holiday season. i want to point out that the stocks are not acting that way. that this is a disaster for the season. the s&p retail index hit an historic high on december 3rd. historic high. since then, it has only been down about 3%. these stocks are not acting like there's a disaster. i can give you several reasons why they're not down so far. number one, we are going to see eps growth in the fourth quarter from some of them because of the extra week that there is. number two, we've had much lower cotton costs this year. their overall costs are lower. that's helping their earnings. number three, inventory levels are much lower. and that's going to help their gross margins. number four, we had pretty good gdp numbers in q-3. number five, home prices are improving. and number six, we never mentioned what gasoline costs drop, we only talk about when they go up. that's been a major factor as
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well. my bottom line is, do not throw out the retail stocks yet. and nobody is. we have only heard from mastercard. i want to hear from what the retailers actually have to say after next week is over. second, other big story today is the continuing yen/dollar/euro data. abe is elected, now he's in power. the bank of japan is going to be meeting january 21 and 22. they're going to raise their inflation target 2%. the yen is at 85 right now. a lot of people are betting it could go to 100. that trade is not yet over. so that is the hot trade that's out there globally right now. number three, i'm pretty optimistic on housing. you saw the numbers on case-shiller, 4.3% increase in october. we're still getting numbers continuing to improve. the levels of affordability are great. mortgage rates remain low. this is one of the bright spots for housing, and will be for the economy in 2013. finally, did you see this amusing story? u.s. government is put on a
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negative watch by china? by china? the credit rating agency in china put them on the u.s. government debt on a negative rating at this point. negative watch. this, of course, was supposedly independent rating agency created in china to try to rival moody's and s&p and fitch's. that's getting interesting play out there. their independence, of course, greatly in question. guys, back to you. >> bob, get a lozenge, will you? >> sorry about that. >> let's head to the pits. good morning, rick. >> good morning, melissa lee. well, no surprise we're still hovering in the 170s in the ten-year. but maybe something interesting. you know, on the floor we call it the growth dividend. if you look at a chart for our ten-year starting on july 26th, and i pick july 26th because that was mario draghi's big day. he said anything it takes. as you look at our rates over that period, then look at the
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boon rates over that period. you can see that the growth/disparity, our yields are higher in that formation than boon yields, because even though funding issues have been largely contained since that july 26th day, we can still see that the prospects for growth may be reflected in these charts, as the prospects for growth are larger in the u.s., fiscal cliffs issues would make it larger. foreign exchange, mainly everybody on this post-holiday, light volume session, seems to have one eye on the yen. whether it's against the u.s. currency, the dollar/yen or euro/yen. both patterns look more aggressive on the dollar side. obviously abe as prime minister is going to bring along with him the largest printing press we can remember recently. and that, of course, will start a chain reaction and maybe other printing presses will run a little faster and a little longer. back to you. >> all right. rick, thanks so much.
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talk to you a little bit later on. we'll check out the latest moves in commodities as well. we go to bertha coombs over at the nymex. >> material stocks are leading as far as stocks, and they're following the materials here. we've got oil this morning, wti nymex above 91, just a few minutes ago, after that case-shiller outlook. despite the fact we had that sort of downbeat report on consumers and spending over the holidays. there is a bit of an animal spirit looking ahead to the fact that the folks in washington are coming back, and making a last-ditch effort to avoid that fiscal cliff, so-called $600 billion in tax hikes, and cuts due on january 31st. meantime, we are getting those reports out of china, that china may start to rebuild. as melissa noted, copper, one of the big beneficiaries today. interestingly, the journal had a report that the s.e.c. has delayed the requests to start a new copper etf, which would be a large buyer of copper.
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that has been delayed until later in 2013, as far as approvals. nonetheless, we've got a fairly buoyant move to the upside this morning. david, back to you. >> thanks very much, bertha coombs. we want to visit a topic, sort of a year-end topic. what we can expect particularly when it comes to the lack of leverage buyouts. we talked a number of times about it this year with other guests as well, that talked about the merger and acquisition environment. it is a glaring lack of activity. i don't want to make too much of it, take a look. you can see how they've done this year. in line with 2010. up ever so slightly from 2011. remember, we have record low borrowing rates in the high yield market, not to mention from banks as well. leverage ratios have crept up, so you can get debt that equals 5.5, or 6, or even more times the company you're acquiring. all of that would argue for more activity on the part of the
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leverage buyers. we've had jim woolery at jpmorgan saying, yeah, i can cut you a $10 million check. we haven't seen the big deals. one reason, simply put, flow begets flow. when there's a lot of activity, you get even more. there is a company looking to be shed of this business, or achoirs another business, they may look to shed another business as well. that might be an audience that private equity is part of. when you aren't having that level of activity, you may not get even more from the lbo. but something we've run up against lately does seem to be a difference in perception in terms of bid and ask, for companies that are thinking they want to sell themselves to a potentially private equity audience, only to find out their price expectations are not there. we've seen that in the market over the last few weeks, and months. consider the case of mbrx, you saw that stock fall rather drastically, even after most of
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the market knew this was not going to be a sale. what i've heard from bankers there, and the case in a number of other situations, is simply put, yes, private equity was there at a price. but that price was far below the price that management thought it might be able to obtain if and when it put itself up for sale. a number of months ago, i told you about advanced auto, hired an investment bank, looking for buyers. in fact, there was conversation that took place, of course. but at the end of the day, while the private equity guys were looking to finance a deal in the mid-'80s, aap was looking for a deal in the low 90s. is it possible for these price expectations will sort of harden around the price? that has been the case in a number of deals. this is reuters reporting, sds, the strategic was there to potentially top this from private equity, again, that we're far lower than some had
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been looking for. that stock falling, reuters reporting, sbx is no longer interested. we'll keep a close eye on lbos as we move into 2013. perhaps the private equity guys, despite having all that money in their funds, are not quite as optimistic as some managements are for the future. >> all right. facebook shares looking to finish out the year with a bang. will the social network surge in 2013. the big reasons people hit the mall on the day after christmas to redeem gith cards and return those unwanted presents. a blessing and curse for retailers. that is coming up.
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after a year of market growing pains, social media heading into 2013 with a strong start. julia boorstin with her predictions for the new year. >> it's all business for social media in 2013. facebook will rev up mobile apps, creating an ad network to take on google and look for new revenue in search and apps. >> building on gifts, facebook will create new ecommerce
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options and focus on selling more digital content. expanding beyond the partnership with apple's itunes, adding more music, tv shows and movies. look for twitter to file for an ipo by the end of the year. in the meantime, they'll grow revenue through new ad products and tools for marketers. plus, it will try to add users by creating an easy news feed for those only interested in following and not tweeting. and as twitter competes with facebook for advertising, expect more twitter/facebook spats. 2013 will be the year of social ecommerce. even the most traditional retailers will add likes, pins and tweets into websites. and pinterest will embrace online sales. while deal a today sites like group-on and living social will diversify into a range of social mobile shopping options. but there are likely to save themselves, more likely to be acquired.
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>> of course, we're watching -- what? >> i was going to say, we'll see where social goes. talking about going to the moon and back. starting with group-on and a bunch of other names that have gone public in the last couple of years. >> the privacy issues, there's a lot of interesting things that will continue to resurface in 2013. >> i think sometimes we forget social when it applies to travel, for example. trip adviser, which one would argue is social, there's been great success, the stock price moving up because so many of the other competitors that are vaguely social, expedia and the like moving up sharply. >> we're keeping our eye on the weather. strange weather. huge storm, in fact, dumping snow and sleet in the midwest and causing tornadoes in the south. now making its way toward the northeast. dave is live in fishers, indiana, with the latest. dave? >> melissa, i almost feel like saying, happy boxing day. because it sure feels like canada here, just north of
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indianapolis, with the winds picking up to about almost 30 miles an hour right now. i'm going to step back, so you can see what the visibility is like. and you can imagine what that's doing to the truck travel on the road, trying to get the goods out of here. and the airport is basically getting lots and lots of cancellations right now. talking upwards of 60 cancellations. see how you can barely see me through here? because the wind is really whipping up that snow as it hits the ground. we're expecting about 6 to 12 inches by the end of the day. the snow is not going to stop until 9:00 p.m. all those people who got gift cards in their stocking yesterday, well, they're not going to be able to spend them here, because one of the major malls is closing here in indianapolis. and this is not just a story about this one city, because the storm is cutting an 800-mile
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swath throughout the midwest. we're talking all the way from illinois, up to ohio, into new york. so this is a very big storm. and on the other end of it, we're going to have another one come in through new year's eve. so we're talking about a triple hit. the one that hit last week, this one, and the next one that's coming up. let's go back to carl. >> all right. dave, thank you very much for that. dave malkoff from the weather channel. we're p bank of america is a standout in an upbeat year for the financials. the question is, does the rally continue in 2013. we'll get predictions coming up. and since election day, the markets have been fighting worries over the fiscal cliff. in the meantime, we'll take a short break. back in a minute.
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we are glad to welcome back simon hobbs to the program. he's going to tell us what's
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coming up at 10:00. >> always good to be back, carl. welcome, everybody. we're going to talk particularly about retail. do we have a problem in retail, and what exactly is it. the ceo of the national retail federation will join us live. we're going to break down specifically whether it's the sandy effect or luxury goods effect. one you might want to sell on. the other thing we talk about is house prices. clearly this morning up over 4% year over year, in the top 20 cities. when will the jobs come back in construction. will that be the major theme for 2013. back to you. >> simon, see you in a couple. the dating scene is hitting a fiscal cliff of its own. an article in the noew york tims may not matter if your credit score is less than attractive. the "times" interviewed more than 50 daters around the u.s. all under 40 years old. what is the most important financial question to ask on a first date?
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tweet us @squawk street. we've got your responses throughout the morning. looking forward to what people have to say to that one. should be interesting. >> first date i tended not to bring up financials in general. >> kind of dangerous topics. >> do you have any brothers or sisters? what was your major in college, right? >> right. >> what are your interests? >> yeah. >> what kind of food would you like to order? can i give you a few drinks? >> what are you doing later on? >> that's a different world, guys. >> when we come back, national retail federation ceo matthew shay, is he satisfied with how his industry fared this holiday shopping season and what could a potential port strike do to the sector. can you count on the rally can you count on the rally continuing in 2013.
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welcome back to "squawk on the street." hope you are having, or had a wonderful holiday. let's get to the road map for the next hour. the real story on retail this morning, the early data for holiday spending has come in below expectations. we'll get reaction from the ceo of the national retail
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federation. plus we'll find out how a potential port strike could cost the economy billions of dollars. it's the first on cnbc interview. >> lawmakers have five days left to get a deal in place to avoid the fiscal cliff. starbucks is even trying to help congressional leaders come together. >> new data on housing out in the last hour, showing home prices are on the rise. will the momentum continue into the new year. we've got someone to lay out the key indicators for investors to watch. >> we kick things off with retail and disappointing holiday sales, according to mastercard spending poll. .7% from a year ago. here is matthew shay, president and ceo of the national retail federation. matthew, great to have you with us. >> good morning. >> i'm wondering, is it shaping up to be as bad as spending poll data is making it out to be? >> i think to paraphrase, mr. twain, the reports of the
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holiday season's demise have been greatly exaggerated. you've been talking all morning how much more spending is left in the season. this is an important day at the beginning of a very important week for the retail industry. we recognize that people are going to have different assessments of how well the season went. we're still pretty optimistic it's going to be a solid year. and we know we'll have year over year growth. the last time the numbers were as low as these guys are saying they were, was christmas of 2008. and we all remember what was going on in the fall of 2008. so we don't think we're going to see numbers like that when this is all said and done. but we're going to hold off until january until we get the final numbers in and make a final assessment. >> are consumers smarter these days? we had a guest on before who said that the most of the markdowns will probably take place in january. certainly before the president's day weekend. so retailers can get ready for the spring merchandise. do consumers know enough nowadays to wait until january to pull the trigger on heavily
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promoted goods? >> consumers are a lot smarter than they used to be. they're certainly more empowered than they were before with the information they need to make smart decisions. retailers have conditioned them to look for promotions and sales. we saw a weakening of consumer confidence as we got into the holiday season. but there were a lot of factors at play here. we had a national disaster at the beginning of the holiday season. we've had all the talk about the fiscal cliff. and we've been saying from the beginning that this was a cautious and conservative consumer, and that it wouldn't take much to sort of knock us off a nice progression. consumers have been carrying this economy for almost two years of year-over-year, month-over-month growth. i think the competitive conversation about the fiscal cliff, while many consumer can't articulate each individual item and element of the cliff, they know there's something not good going on with the economy right now. and if it's op the front line of every newspaper and it's the headline and lead story of every
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television show, that starts to seep into consumer psyche. that i think will play a role. >> mr. shay, that said, and you've said it, do you think that your 4% estimate for year-on-year growth was perhaps overly optimistic in view of what is unfolding on capitol hill, and evident on every front page this morning? >> simon, i don't think so. we're not ready to go there yet. mastercard's assessment of .7 this year compares to 2% last year. and our prediction of 4% this year compares to 5.5%, 5.6% a year ago. they don't measure the market the same way. they look at a much smaumer slice. they don't have online sales. i'm not sure how they get the proprietary data from the competitors. we're going to wait until we see all the numbers and make a final assessment when they come in. >> sure. but equally what you're both talking about is shared volume, you're not talking about levels of inventories, and you're not talking about levels of
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mark-downs. therefore, the profitability of the industry this year. i would ask you whether you believe it will be as profitable this year as it was last year? >> well, the margin question is always the big one. i can't make a prediction now. but we know that going into black friday, and the initial holiday week, when we kicked this season off, that's what we were talking about, is are we leading so aggressively with promotions, and we saw it was widely reported today in many of the stories the kind of promotions that took place last week, maybe deeper than we thought they would be. so i think it was clear that retailers were were sensing that the market was getting tougher and getting customers out to their stores. >> is there any data that indicates a rebound in a week following what has been a weaker christmas selling season than had been anticipated? >> i don't know about a rebound, but i think there's still plenty of time to salvage a good year. >> i just wonder whether there's historic data -- if it's weak, it stays weak, and if it's
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strong, it stays strong. is there any indication you can have both? >> i don't think we've got any of that. but i know for sure retailers aren't going to quit until the month is over. they're going to be out there aggressively trying to get customers in their stores. everybody's predictions were pretty robust for black friday and the holiday week following. we started off well. and if we can finish well, i think we'll still be in the 3.5% to 4% range. that's virtually where all the assessments were at the beginning of the year. and we think we'll still be there, especially with the push online, which has done well this season, in spite of the numbers that mastercard had. >> matthew, as we look for discrepancies between your data and their data, are gift cards part of that? i'm wondering has the credit card company recognized it as revenue? that's not the same as a retailer recognizing it as revenue, right? >> it will get recorded and
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booked now, not then. 8 out of 10 customers in our survey were going to spend money on gift cards this year. and there is data that shows, to david's point a minute ago, there's real data that shows when you spend a gift card, you end up spending more than the face value of the card. so that's going to happen today. and for the rest of this week. and i think online is going to continue to do very well this week. so the combination of those two things, we think still puts us in a pretty good position. but we'll all be back here talking about this again in january. when we get past the cliff, you know, looks like we're going to go over, increasingly, that we're not going to get the big deal we hoped we would. enormous missed opportunity, we think. you've been talking about rise above. this is unfortunately going to look like fall below. and what that means for the beginning of next year, we'll have to wait and see. >> matthew, one last question, and that is, the port strike that is potentially looming here in the northeast and the gulf ports. how big of an impact could this be on your industry?
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>> well, this is the container cliff. once we get past the fiscal cliff, we're in the container cliff. this is 45% of the commerce that comes into and goes out of the united states. the last time we had one of these in 2002, president bush had to intervene. it estimated to cost $1 billion a day in 2002 dollars. our economy's probably in a worse place than we were a decade ago. if this goes on and we don't get some clarity here, this will affect everything from eastern goods to summer bathing suits. >> are retailers already making other sorts of provisions for getting goods to where they need to be? >> retailers are very aware about the possibility this might not turn out well. so i think all contingencies are on the table. that will affect the next two or three seasons worth of sales. >> matthew, great to see you. matthew shay of the nrf. >> thank you. >> five days away from going over that fiscal cliff, as matthew said. how should you position your
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portfolio? gentlemen, good morning to you both. good to see you again. >> thanks for having me. >> good morning. >> charles, everybody wants to know, if you're in the mood to buy something, do you really take a flier on congress getting it together, even if the president is coming back early from vacation? >> no. it would be a mistake to be trading your portfolio based on your outlook, this is the most widely covered story i've seen in a long time. it would be a bad idea to try to invest, making a prediction around the fiscal cliff. what you do know, we believe when this gets solved, and it will, that the stock market looks pretty cheap to us. when they get behind this, there are certain sectors that will do very, very well. >> david, is it possible, i mean, if this goes well into january, and we are down 500 points, 600 points, what do you do? >> well, i think you have to look long term, carl. that's a little bit trite, but
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ultimately you have to look at what's the real impact on the economy and corporate earnings. i agree, i'm sure something gets done. neither party wants us going into a recession. whether it's a grand deal or smaller deal, once we get that uncertainty removed, that's going to be the trigger to getting the market going higher, to getting corporations to spending more, to getting better job growth, consumers back spending. removing that uncertainty will be the key. ultimately that will happen. so i think, yeah, if we're down in the middle of january because something hasn't occurred yet, and the tea leaves don't show a complete failure, i think that's a buying opportunity. >> you know, david, people might want a more granular approach to what's going on, they might look at the past year and say, okay, behind the indices has been a dramatic rotation into, for example, financials. up 25%, 26%. more problematically in this instance with the fiscal cliff, the consumer discretionaries. the restaurant stocks have done well. the retailers have done well. they could easily re-rate, in
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other words, correct, partly because consumers could rein in, and we could be seeing that now, we may not, or partly because wall street fears they would rein in. can you see consumer discretion as being vulnerable at this position now? >> consumer discretionary has been the best performing sector since the market bottomed in 2009. if there is a sector that could be in line for a re-writing, as you say, that's probably it. i think the most prudent way to look at the market today is to focus on sectors that have good dividend yields, good valuation and potential for revenue growth. health care and technology both fit that particular area. and i think those are the areas that, from a prudent perspective, might be the best place to make your bets for 2013. >> charles, where would you begin the new year? i know you're looking at value tech names, leapfrogging off of what david just said. you make the point that dell -- i'm using a dell right now. it's not going to go away, you say. >> they've made some great
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acquisitions over the years. they have a ton of cash. people are predicting dell will go away. the pc is going to go away. we don't think it is. the stock is just very, very cheap. and microsoft is the same way. microsoft trading at well less than ten times earnings, is not requesting away. >> at the same time, charles, it may not be going away and cheaper, what's the catalyst to get it from less cheap to a little more expensive to make money on this investment? what is going to be that driver to make the stop go higher? a lot of companies can make products that exist for a very long time but not be very good investments. >> that's the question people have been asking, value investors since ben graham created the field. the answer is, there's no identifiable catalyst. the beauty of value investing is you buy something less than its intrinsic value, and eventually that value gets realized. it just can't see what's going to make it happen up front. >> charles, david, thank you guys.
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talk to you soon. >> thank you for having me. >> we take you live to the nymex to find out exactly what is behind the $2.45 move. that is a big move. for a number of shoppers, post-christmas rituals include, of course, gift cards today. and many unhappy returns. up next, jane wells will be with us in l.a. with the lowdown. good morning. >> hi, simon. yeah, you were just talking about it a little bit. there's been this transition from my generation, yes, i'm old, i like to gift, even if i don't like it, to my kids, 20, 22, they just want gift cards they don't care about the thought. give them the money. and is it enough to save christmas. we'll have that after the break.
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welcome back to "squawk on the street." i'm bertha coombs at the nymex. we have a nice little rally. if you're long, it's looking pretty good. nymex leading the energy complex. we had the contract here go above $91. that's a two-month high for the current contract. partly we've seen a little bit of a weakening of the dollar. that has certainly helped commodities. also optimism about the fact they're getting back to work in washington to try to avert the year-end fiscal cliff situation. meantime, one of the things that's interesting is how wti nymex has performed. year-to-date it has been the worst performer with regard to
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its loss versus a gain on the benchmark now for the global crude of brent. because we continue to see a glut here in the u.s. of oil that's produced, and unable to get out to the rest of the market, to the global market, because of a lack of infrastructure. in fact, that brent premium for a second year has topped $15 on average for the year. we're close to $20 here. nat gas also getting a bit of a boost today. the near term forecast certainly chilly. you can see that with all of that snow that's headed towards the east coast from the midwest. back to you. >> thank you very much, bertha coombs. bargain-hungry shoppers are hitting the mall today to go after door buster deals and return the unwanted sweaters and socks they received yesterday. they're also hoping to get more out of their gift cards. jane is in l.a. with more. jane? >> melissa, employees are starting to arrive here and get prepared for gift cards and returns today. nobody expected this year's
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holiday season sales growth to be as robust as last year's. you were just talking about it. mastercard spending poll said it's been a lame christmas with a projected .7% growth. others are disputing that. but marshall cohen said, you can't really blame the fiscal cliff. honest. list listen. >> they got caught up in it at the very end when it hurt the most. you would sit there and say, it's not going to really affect -- are you not going to buy something on a list for somebody? of course not. you are going to buy. what it did do is tell the consumer, think twice before you buy for yourself. when you really analyze holiday growth, it comes from self-gifting and impulse purchase. >> okay. the silver lining could be gift cards. you heard matt say say it, projecting on average $157 on them. who sells the most? >> it's evident that it's clearly rebounded. it's beyond the previous levels
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that it had been at before the recession. >> interesting. that was not exactly the bite i was expecting. starbucks sells the most, followed by walmart. and macy's, according to brian riley. he said more people are using the entire gift card, reducing ha he calls spillage, the unused amount. it used to be 10% of the gift card was left unused. he said that's now reduced to 2% which is a $6 billion difference. he also says, a store brand card like nordstrom's compared to visa, mastercard or bank card, those credit card and bank cards, if they're stolen, you have no fraud protection against them. he said if you get them, spend them right away. my son immediately uploaded his visa to his amazon account, so it has protection. >> jane, thanks for that. so much to think about, even as you're returning and using cards in this environment. thanks so much. jane wells. when we come back, find out how
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the fiscal cliff is affecting the euro's move higher. here's one corporate executive's view of the fiscal cliff. >> i'm the president and ceo and owner of canon safe. the fiscal cliff is going to impact me as a business owner. it makes me uncertain. it makes me wonder, should i expand? should i hire more people? do i need to lay people off? the bottom line, we're at this point in a lack of leadership. it's an embarrassment how washington is acting. i am begging somebody in washington, step up. be accountable. take responsibility. solve the root cause of these issues. get smart about your weight.
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the graphic says it, market flash. welcome back to the program. let's look at best buy. the stock's not moving higher, but there are positive comments out there. rare positive comments from an analyst about the store upgrades. bby has been remodeling a number of stores.
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david chick says they are a real improvement from the old stores. he visited a bunch post, pre, and post remodel. he thinks these are pretty good. he believes they can help with the magnolia sales. their higher end store within a store. making positive comments about these remodels. still, not really helping the stock today. bby shares are down 33% just this quarter. seems like a buyout may be the only big-time hope for bby in the near term. >> brian, thank you for that. currency wars are back. japan's new prime minister is warning the bank of japan had must match efforts by both the u.s. fed and ecb to weaken their own respective currencies. a cnbc contributor and publisher of the bush update joins us in our "money in motion" segment. you wonder how much lower the yen can go from here. we knew this would be the point of the election, and sure enough, now we get the verbal intervention. >> right. well, i think we've got now abe
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as the prime minister. now we're into full abe-nomices where they're going to try to push the envelope as far as inflation, as far as weakening the yen and fiscal stimulus. we hit 85. that surprised people on the speed of it. they want it to get to 90 to aid their exporters. the guy that he put in place for the finance ministry, mr. asso, he's going to push to do the stimulus. he's got another new cabinet called the economic revitalation minister. he's being installed as well. this is a full-fledged push for reflating the japanese economy. so 90 is their target. >> what's yours? >> it's going to be tricky to get up there. you'll have exporters selling on the way up. what's interesting to me, soy simon, you're seeing, while the
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ozzie dollar is falling, the euro dollar has not fallen off much. even the euro's holding up a little bit because of the euro/yen. buying euros and selling yen. that's my trade here if we want to look at something to do. again, you're in the middle of a tricky period here where there's vacations all over the place. today's boxing today, so there's holidays throughout europe. continue to buy dips on the euro. leave a tight stop 131.20. look for three times on the upside, around 130, 133. tricky during holiday trading. keep it very simple and go with the trend. >> you know, andy, i'm interested that you've chosen to do that, because it flies in the face of an article written by the journal a couple of days ago in which they were suggesting that the fiscal cliff trade here whenever you get bad news from washington is buy the dollar as a safe haven. you're going the other way here.
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>> right. well, i think there's going to be some battles. i think most of the market feels you will get forward movement when congress comes back. you're going to get a very watered-down plan to punt this forward. that's something i've been telling clients for about three months. that's my expectation, punt forward, but not going to be very pleasant. >> good to see you, andy. hope you had a good holiday. andy busch with "money in motion." catch currency trading on friday at 5:30 p.m. eastern. if you want more education about currencies, go to currency class at money in motion.cnbc.com. >> an article in today's "new york times" finds once traditional dating priorities like having a good job, physical chemistry, may not matter if your credit score is less than attractive. the "times" interviewed more than 50 daters all around the u.s. they were all under 40 years old. brings us to this morning's squawk on the tweet. what's the most important financial question to ask on a
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first date. tweet us @squawk street. are we getting any responses? >> i don't know. can you imagine opening up that conversation? so, what's your credit score? are you using experian or transunion? >> i would expect you to do that on a date. >> what? why would you select me? i feel like that's not a compliment. >> this is a question you ask when you're over 40. the responders in that were all under 40. >> that's true. more to do with maybe a nest egg, so to speak, right? >> you can be more reckless. >> oh, yeah. >> london, here we come. >> retailers feeling the effect of slow holiday spending this year. what does it mean for 2013? find out after this.
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the lexus december to remember sales event is on. this is the pursuit of perfection.
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some of the stories we're squawking about. toyota expecting global vehicle sales to rise 2% in 2013 versus 2012. automaker predicts the increase will be driven by overseas transactions. toyota estimates sales for 2012 will be at 9.7 million vehicles. up 22% from 2011. instagram getting hit with a class action lawsuit. the suit against the photo filter service was reportedly brought by a california user claiming breach of contract.
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facebook which now owns instagram believes the complaint is without merit. netflix is back after a christmas eve outage. the video streaming service has problems at one of amazon's web service center to blame. the subscribers in the u.s., canada and latin america. >> five days left before we could potentially go over the fiscal cliff. president obama is cutting short his holiday in hawaii and returning early to d.c. he should arrive there capable of negotiating from tomorrow. chief washington correspondent john harwood joins us with the latest. john, i mean, how optimistic can we be? this market is not falling out of bed as the clock ticks down. >> you know, i think everybody's counting on the holiday mood changing somewhat the tenor of the negotiations in combination with the fact that the republican position has kind of collapsed, with the collapse of plan b. the speaker tried to stake out a position in contrast to the
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president's. he couldn't get votes within his caucus for that. and so the republicans are getting weaker by the day. if they decide to wait until after january 1st, when all the tax rates go up, i think many republican members of congress think it's inevitable they're going to give in at that point, so the question is, do you want to drag this out, do you want to take the punishment, or the blame for a market sell-off that would occur if we didn't have a deal by the end of the year? i think all those factors, plus the idea of a mini deal that would only be temporary, suggests that the kick the can option at least for a couple of months may be something coming into focus. >> in the context you just described the situation as you see it, that's your analysis. a liberal said to me over the weekend, i actually want us to go over the fiscal cliff. i want the sequester to kick in. that's the only way we'll cut defense spending in this country. what is happening with the
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sequester? where are we on the pentagon cuts? >> nobody wants those pentagon cuts, including the president of the united states. there may be some on the left who would favor that. but that's not a dominant position. that's not where the political center of gravity is in the country. i think it's very likely that those sequester cuts are going to be turned off. now, remember the sequester, $1.2 trillion over the next nine years. that's a little over $100 billion a year. so half of that is defense, half of that is discretionary. the kick the can mini deal solution that we're talking about would identify some subset of spending cuts that would be the lowest hanging fruit still available that might turn off the sequester, or they could just turn off the trigger all together. the sequester exists because of a law passed by congress, another law passed by congress could change it. >> good to see you, john. thanks for the update. >> mastercard spending pulse
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saying it's the lowest level of 2008. high end is one of the areas getting hit hard. tom is managing director at the tellsee advisory group. good to have you with us. explain what the geography is. already sales in the mid-atlantic and northeast were weak. and then luxury is strongest in the new york area. some estimates say that's about 20% of that category sales in the new york area. what do you account for the weakness, particularly in new york? is it cliff fears at this point? >> melissa, i definitely do think that the cliff fears are impacting the consumer. i think we found the luxury consumer historically it's highly correlated to personal wealth in terms of the stock market, in terms of value of your home. clearly i think people are wor worried about higher taxes across the board. >> do you think it's higher taxes or prospect of lower bonuses? >> i think both.
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eccentric, bodes to spending here in the northeast. as long as the economy holds up in terms of the markets and home prices and those type of things, again, the consumer has always been about the ability to spend versus willingness to. >> so which are the retailers, tom, in your opinion that could be hit the hardest? luxury obviously runs the gamut. >> yeah, absolutely. i think in terms of the middle tier consumer, we still haven't seen them come back in terms of the aspirational. in the high end, if we see us going over the fiscal cliff, like we saw in the recession, there will definitely be a pullback. maybe less units purchased. but there's still on the margin impacted consumer. but in terms of the middle income consumer, that could be impacted the most. >> talk about the broader picture here. i appreciate we're getting articles continually out of china suggesting that the new regime is going to cut down on excessive displays of wealth.
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but the middle classes are still getting richer in the brit countries. that isn't changing. that story is still intact. can i buy stocks on it, or have we now got serious impediments for the sort of reasons you described? >> i think internationally, you still do have a lot of potential growth. especially on the higher end where we see a lot of companies focused on the bric countries, china being the biggest. even the tertiary cities, we're seeing more companies go into that which breeds competition. there's still clearly a lot of opportunity. >> what names -- what are those names, tom? what are the high end names? >> i think the high end names in terms of, again, the high luxury names, lbmh, those companies that have the brand cache, i think will internationally do well. >> not tiffany's? >> tiffany's, i think, domestically, again, internationally there's opportunity. but again, a strong brand name. so i would put that in a similar boat. >> speaking of which sort of
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brings us to what's happening in japan right now, tom. i wonder whether or not abe is positive for consumer sentiment. we know how much some of the names rely on that specific demographic. >> absolutely. think about tourism and those things, we've seen that curtail a little bit. again, for the u.s., kind of companies definitely an important part of the global economy we're seeing. but again, we'll have to see how it plays out. definitely an impact. >> tom, good to speak with you. >> thank you. >> tom chin. brian sullivan is back at hq manning the desk. >> it goes along with what you just talked about, japan. i want to focus on nmr, how it trades here. no real news. they made deal with a small division, but that's not the news here. the news seems to be that the ceo of dawa making positive comments over the last couple of
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days about shinso abe, and he sees a 30% rally in japanese equities in 2013, because of this printing press, or whatever you want to call it in japan, qe-1, who knows. either way, the ceo saying, i see good times for the stock market in japan. and look at the nomura holdings. that stock up 60% over the last four months. so people have already been buying into japanese equities. another 6.5% gain for nmr today. >> could i put a big warning across this. >> sure. >> that's in yen terms. the aim here is to debase the yen currency. if you're an american investor, by all means, you might get 30% return on the nikkei next year. but you have to subtract the currency effect on that. that could be huge if the bank of japan is more successful debating its currency than the fed's current efforts. >> you could be like carl bass and change your mortgage into a yen-based mortgage.
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>> ooh! oh, no, no, no. don't do that. hi a friend who did that into euros. no, no, no. >> that's a different issue. >> how about the tazmanian dollar? >> you got me there. >> "money in motion" happening right now. >> nice, brian. thank you. brian sullivan back at hq. case-shiller found prices raising in most major cities over a year ago. could home figures show an increase in well. we'll look at housing in a minute. despite the retail slowdown, we're on the hunt for the most-bought items at the most-frequented online store this holiday season. we're betting on a parachute in case we go over the cliff. "squawk on the street" is back in a minute.
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we had good news on housing this morning. the case-shiller indention has been published and shows that
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home prices year-on year are up 4.3%. tomorrow we get new home sales data. the head of the committee talked about the impact bonuses will have on housing. >> the bigger thing that's likely to show up, especially in the new york metro area, is really a question of what seasonal bonuses look like. traditional issue for new york city area has always been how good the bonuses are, if they're real good people go out and buy slightly bigger houses than they had expected to previous live. >> that was the view earlier today. let's bring in cameron findlay at the discover home loans. he joins us on the phone. let's leave new york to one side, cameron. because they are not performing as well on the upside. they didn't go as far down on the down side. this is a good report, is it not. 24% gain in detroit, 22% gain in san francisco, and phoenix
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year-on-year. we're doing good things in housing, surely. >> we are. look at phoenix as an example. 21% increase year over year. look where they careful and where they're coming up the peak. they were off 56% from their peak. they significantly came down and have since rebounded. that's a positive thing. the fundamentals looking strong. we're seeing strength in terms of pending home sales, existing home sales. if you look at existing home sales specifically, look at the supply there, the supply is significantly down, too. we're down about 32 percent year-on-year. so they're all positive signs. >> and yet in terms of jobs and growth, the jobs are not coming back in construction. we gained since the bottom of the housing market 58,000 jobs. in construction it's 2.2 million. >> you speak to something very fundamental to the process here. we're not in a cyclical employment process, we're in more of a structural employment issue, such that as people come
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back into the work force, they're not gaining back the same wages that they were when they left. we still have around, even with the 7.7% unemployment rate, we still have around 12 million people unemployed. that's still more than twice what we had, because of the decline of the participation rate. we still have 12 million people despite a 7.7% unemployment rate. so still very high. >> what you do have, of course, is a federal reserve that is going all out to do what it can, currently buying $85 billion of assets every month in the market. on this program, we spoke many times about why that activity is not following through to still lower mortgage rates for people. the journal highlighted this over the weekend. they're talking about a 30-year mortgage rate being up 3.3%, and in fact it probably should be at 2.8%. that would be a huge bonus, would it not? why is it not happening? >> yeah, you're speaking to a very important issue there in that, mortgage originators are not lowering rates as much as they could to consumers, simply because of the volume that is
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out there today, i.e., there are only so many originators that can process so much volume. as loan originators receive in that volume, they're in the process of trying to get that pushed through as quick as they can. the timelines are extending right now. they're maintaining rates slightly higher. in fact, i would say substantially higher to what they should be to your point earlier. the concern is looking out the horizon is what happens to a regulatory standpoint defined in the first quarter of 2013. and what impact that will have on consumers. the expectation is, we'll see much higher rates for those who do not qualify, which is very alarming. >> cameron, the last question here, have we seen the bottom when it comes to mortgage rates? are we at it right now? i'm sure there are a lot of people sitting on the fence wondering whether they should refinance or lock in their rates at this point. what's the answer? >> in the short there is, if we did see a bit more competition, i think you would see compression of those mortgage
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spreads allowing rates to decline more. but i don't actually foresee that. in fact, i probably see the reverse. by the time we see that spread compression, we'll probably see the rates start to rise slightly. i think we've hit the bottom. we're likely to go up from here. >> good to hear from you, cameron. cameron findlay joining us in terms of the new housing data today. >> despite regulation in restructuring, the financial sector seeing double digit gains in 2012. what could 2013 have.
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in the midwest, tornadoes in the south, it's all heading this way. the weather channel's jim cantore is live in mobile, alabama. jim. >> reporter: this area taking it on the chin last night. maybe a four or five mile path with a tornado at least from here in the low ef-2 to ef-1 range. winds over 100 miles an hour. the damage extensive. the slate roof, two pieces are laying off at the bottom. tree damage quite substantial here, right where this 100 mile path of the tornado was.
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power crews have been out all night. what a job they have done in alabama. 40,000 people last night losing power. they're now down to 7,000 statewide and about 4900 here in the city of mobile and it's because of guys like this really out here in the bucket, up in these trees doing a pretty intricate job of cutting around a lot of these power lines so they can get a new pole back up and eventually get power back on. a tremendous job by the state of alabama in getting the power back on when you remember back a few weeks ago of how many people waited two weeks, three weeks, four weeks to get the power back on after sandy. granted, this is not the same size of that. either way, it's strong nonetheless. this car right here, we talked to the lady earlier who rode out the tornado in this car. if this tree had not landed on top like this, it actually held the car here, there's a good chance that this lady would have been the first victim of this tornado outbreak.
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thankfully nobody died from what we hear at this point. carl, back to you. jim, those are some pictures. a lot of people in the northeast paying close attention to that storm as it gets closer and closer to us. jim cantore, thanks for that. let's get over to the cme group. rick santelli has the santelli exchange. good morning, rick. >> good morning, carl. i guess no topic makes me grind my teeth more than the culmination of the entire bailout nation issues than housing, okay? only can the u.s. government, i take that back, only can government, period, including the u.s. government turn a detour into a four-lane highway, okay? let's talk about infusion. governments tried to create faux guarantees when they set up the gses when they created the structure of special financing and faux guarantees whether they were applied or assumed, we all know how it turned out.
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taxpayers ended up getting the bill when government took over the space. and then we get all the faux guarantees of fixing the original faux guarantees as the intrusion really did get worse. i take you back to september of 2008 when the gses were put in the conservatorship and then treasury secretary paulson said the following quote. i attribute the need for today's action, talking about conservatorship, primarily to the inherent conflict and flawed business model embedded in the gse government sponsored enterprise structure and to the ongoing housing correction. well, first of all, how many experts have we had on lately that have said housing is doing much better. today's kate shiler seems to be ongoing proof of that, but is it enough? no. the last issue is the confusion continues. usually when you make a mistake and then make a mistake to correct the mistake, at some point you try to do a
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postmortem. cost-benefit analysis. how much do we owe? have any of these programs helped? no, where we're at now is we're supposed to include the fak to come up with another program to modify even on deeply upside down mortgages, but that plan ran awry because as the other shoe dropped, and boy we're talking about a shoe that can fit most of the kids in the country, they are after 78 years basically bankrupt. so the story here is this, unless we do a real cost-benefit analysis and be honest with ourselves, this is another case study on why the fiscal cliff is such a difficult task, because the government never likes to go back and clean up their messes. they like to modify the mess, make it look a little neater. how many times have you heard me say, you can't wallpaper over termites. it's wallpapering termites that are on top of wet drywall. somebody somewhere needs to understand there's a lot of banks that would like to get
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into this space. maybe that's what we should concentrate on. back to you, carl. all right. thank you so much, rick santelli in chicago. still to come, we're going to talk to the head of the credit reporting agency local research department about the most shopped at online stores during this holiday season. speaking of credit, we had an article in today's "new york times" finds out right after your prime, perspective gaining conditions are asking for your credit score. what is the most important financial question to ask on a first date? tweet us at squawk street. time for citi price rewind. because your daughter really wants that pink castle thing. and you really don't want to pay more than you have to. only citi price rewind automatically searches for the lowest price. and if it finds one, you get refunded the difference. just use your citi card and register your purchase online. have a super sparkly day! ok. [ male announcer ] now all you need is a magic carriage. citi price rewind. start saving at citi.com/pricerewind.
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citi price rewind. excuse me, sir i'm gonna have to ask you to power down your little word game. i think your friends will understand. oh no, it's actually my geico app...see? ...i just uh paid my bill. did you really? from the plane? yeah, i can manage my policy, get roadside assistance, pretty much access geico 24/7. sounds a little too good to be true sir. i'll believe that when pigs fly. ok, did she seriously just say that? geico. just click away with our free mobile app. what starts with adding a friend... ♪ ...could end with adding a close friend. the lexus december to remember sales event is on. this is the pursuit of perfection.
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to the best vacation spot on earth. (all) the gulf! it doesn't matter which of our great states folks visit. mississippi, alabama, louisiana or florida, they're gonna love it. shaul, your alabama hospitality is incredible. thanks, karen. love your mississippi outdoors. i vote for your florida beaches, dawn. bill, this louisiana seafood is delicious. we're having such a great year on the gulf, we've decided to put aside our rivalry. now is the perfect time to visit anyone of our states. the beaches and waters couldn't be more beautiful. take a boat ride, go fishing or just lay in the sun. we've got coastline to explore and wildlife to photograph. and there's world class dining with our world famous seafood. so for a great vacation this year, come to the gulf. its all fabulous but i give florida the edge. right after mississippi. you mean alabama. say louisiana or there's no dessert. this invitation is brought to you by bp and all of us who call the gulf home.
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the dating scene is hitting a fiscal cliff. one traditional dating priority is like having a good job, physical chemistry may not matter if your credit score is less than attractive. brings us to the "squawk on the street." what is the most important financial question to ask when you're on a first date. john rice, this is great. now can i see five years of tax returns. so will you make more or less than 250,000 in 2013?
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they write shall we watch "squawk on the street" at my place or your place tomorrow morning. >> go, alahandra. >> it's an early date. a breakfast date. >> what are you going to watch? >> we'll go deeper into the west coast. a major grain point of export so we're going to see what the impact is going to be on the markets. of course, it's going to be a rocky ride in the next few days. traders will give you the next best place to protect yourself. >> there is a valley at the end of all of these cliffs, what with the container cliffs, there's going to be a lot of stuff sitting at the bottom of that valley if we go over it. >> yeah. meanwhile, david, going to misz you. you're going on extended vacation. >> avoid the fiscal cliff entirely. >> good luck with that. >> you have a great situation. >> much better. >> close today. >> you're not rising above, just gets out. >> that's your own, getting out. >> safe travels. see you when you get back. the next hour of "squawk on the street" starts right now.
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>> a look at the dow. s&p down four points. the nasdaq down 14. couple of big movers to watch today. zynga sinking more than 2%. they're close to launching its real time money gaming site in the u.k. also on monday, this is the time to reconsider the stock because of its strong balance sheet. retailers of the biggest losers after holiday numbers did disappoint, everything from the high end be to the low end. urban, coach, macy's, target. the real deal on the detail. holiday spending expectations. banking on 2013. taking a look at what could still be in store for the new year. five days out from the fiscal cliff. we will run the latest scenarios and find out what they could mean for your money. first though as we
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mentioned, holiday sales on the disappointing side. could this set the sector back in a big way. patrick mckeevers is over at mkm partners. howard toobin is a retail analyst. >> good morning. >> patrick, let me start with you and ask whether this recent set of data, which is essentially capturing the whole season, came as a surprise? because i haven't seen too many tracking polls, so to speak, that would suggest that the season is as weak as this says. >> not a surprise to me. i cover the discount store space so i do cover walmart, target, tjx, so on and so forth. >> what did you see? >> what i saw was pretty weak traffic. a good black friday followed by a pronounced lull in spending. and a decent pickup into the -- into christmas, but just not enough to make up for some of the earlier weakness. target, for example, there was a lot of excitement about the
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company's partnership with nieman marcus, and they marked that merchandise down 50% last week. i don't think that was their plan. they went into it actually with some fairly restrictive policies. you could only buy five items, that sort of thing. i think they'd be pretty happy if someone would take that merchandise because it didn't sell well. >> howard, was this a matter of right after black friday, is this all being pulled forward? does that explain the strength of that? is that what happened? is this fiscal cliff? is this consumer confidence all taking a bit of a hit in the past few weeks? >> i mean, it's probably a little bit of everything, i'd say. you know, obviously the strong momentum of black friday didn't carry through here, but i don't think the season was a total loss. i mean, i saw the same thing patrick did. we had a lull of first couple of weeks of december but then things built up towards the christmas holiday. i think it will turn out to be
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in general fairly positive for most guys. within that there are some guys who i think will outperform the, quote, market share. >> give me a couple of names. be more specific. who will outperform on a relative basis in the next few weeks and quarters? >> oh, sure. so i think if you look at the guys who sell differentiating merchandise or product that you can't really buy in ten or 20 stores across the malls. low lemon will have a good christmas season. smaller company like francescas is set to outperform. i still like tjx here. they have great products. they deliver new merchandise in stores almost on a daily, weekly basis. keeping the customer interested and excited. they're going to be one of the standouts for christmas and for 2013. >> all right. patrick, i know you also have a buy on tjx but kohl's and roth.
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what's the thread that ties all of these together? >> in my group it's been choppy. tjx has been a winner. i like that stock. that's where my best store checks have comfort last 12 months. the traffic looks great across the company's context. i spoke negatively about target. i am recommending the stock. they have an entry into canada in 2013. they're going to launch -- they're going to open 100 plus stores in the early part of 2013. i think that will be a catalyst for the stock. i think they'll do quite well there even though, again, i don't think they had a great holiday. ross, they're the number two off price retailer. that's been a really good name. i think the momentum continues with that company as well. so it's just mixed across my group. you just have -- there are some winners and there are some losers. there's not a lot of consistency. i cover value retailers. you would have thought this would have been a value focused holiday season. even within the discount store space the traffic was pretty
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subdued. >> that's interesting. howard is the big story in the next week or two going to be how painful clear -- the process of clearing out inventory is and how deep the discounts go? >> yeah. i'm not sure that it's going to be all that painful, right? i mean, it seems like we're finally getting winter weather conditions which is going to help with boots and coats. last year the weather was very easy. we have that to look forward to. last year was a very, very difficult holiday season fourth quarter. this year going into the holiday season, inventories were much leaner so there's less probably this year versus last year to get through. so despite promotions that appeared almost as address sieve last year, despite weather not helping us and going into clearance after christmas, i still think there's still good potential for margin improvement. cotton costs in general were down. despite costs, it may be slightly positive. there should be margin
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improvement. there should be margin growth in the quarter. >> it's amazing how many cross current are at work here as we try to make sense of this most recent set of numbers. thanks for your time. we'll talk to you later. patrick and howard. meantime, commodities are big movers today. oil prices up 2.5% but that has not been the case for most of the year. jackie deangeles is back at hq. >> hey, carl. if you look at the s&p goldman sachs commodity index as kind of a benchmarks for commodity performance, it's on track for a flat year. if it heads south, that would be the first loss since 2008. that doesn't tell the whole story. there was actually a lot of interest in investing in the commodity process this year. money invested in commodity funds is up 86% to $20.8 billion. that's according to epf r. where was the most -- the growth that we saw. soy bean meal was one hundred. wheat, they've seen staggering percentage growth.
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38% and 27%. demand has increased. lumber also a stunner this year gaining nearly 50% to date. two factors, of course, at play here, the housing market showing some signs of recovery and also supplies have been needed for sandy rebuilding. now another big winner this year, although not as drastic as some we've noted. gold. the precious metal has been under pressure lately. year to date it's up nearly 6% and it's also on track for its 12th consecutive year of gains. there's no shortage of gold buds out there. many analysts expecting gold to rise higher in 2013 as a hedge against all the uncertainty. there were some underperformers this year. i want to highlight them. coffee, o.j., sugar. some of the laggers. we've inincreased production. that creates a supply gut. cotton and sugar are close to their top production.
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they could present opportunity next year. last but not least, k56rcarl, o. it will show a year to date decline of 8%. you have traders trying to make a little bit of money to the upside as it moves. they're making their long-term best once they get a resolution on the cliff. back to you. >> that's if and when that happens, absolutely, jackie, thanks so much. as jackety said, markets are worry about the cliff. steven gill foi with mer ridden equity partners is here. happy holidays. welcome back. >> glad to be here. thanks for having me. >> interesting that oil is up. some traders are crediting the fact that the president's coming back early but certainly stocks aren't triding in tandem. why is that? >> you know, it gets under my skin a little. what we see in d.c. on both sides of the aisle, the president taking a vacation. if only our ee liblgted officials saw the kind of work ethic that everyday americans
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show, then maybe we wouldn't be trying to settle for some, i don't know, crazy half deal that will get us into the new year. maybe we can have a real deal that was almost priced in. now you see that risk coming back out because traders aren't quite sure what to do. we're kind of in a quandary. the market didn't catch 1422 like it was supposed to. the next catch point is 1415 for the s&p. there's not that much volume and you have a lot of traders with question marks on their head. >> yeah. talk about the most watched travel schedule. we know the president will arrive in the morning. we know house members say we could call you back with 48 hours' notice but there's been no contact between the president and the speaker as far as we can tell. >> no. >> is that really what everybody is watching? is that what is going on? >> that is pretty much what everybody is watching. yeah, we're watching the make crow date at that --
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in recent weeks it flies in the face of the longer train. is this the beginning of something new and longer lasting or not? >> you know, that was actually dinner discussion yesterday for christmas at my family. >> really? >>. >> you know, it is definitely a concern. now people start losing money in bonds, then what? you know, that might be the next good thing for stocks but, i mean, there's a lot of uncertainty. there's no certainty we should say. not a lot of uncertainty. there's just no certainty. and people don't know where to start. >> yeah. we know historically the last week of the year has been good. last five trading days have been good. even the first couple days of the new year. is that trend feel to you like it's going to be intact? >> there is tremendous potential for that to be the case this year because as both sides get back to, would, you know, i'm glad they're coming back, the
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senate goes to work tomorrow, how nice of them. as both sides come back and they started working, they're both going to start talking. they're going to be approaching guys like you in the media saying what they're saying trying to make it look like they're working for their c constituen constituents. there will be optimism. even if they get a half deal in place by the 31st, at least into the first week you'll see some rise in prices. >> in the meantime, 1415 or is there another level? >> 1415, 1410. there's always another level no matter where the market is moving. >> yes. unfortunately. >> that's what i do for a living. >> invite us to dinner. that sounds like a good conversation. thank you for coming by. >> thank you. brian sullivan has a market flashback at hq. brian. >> carl, i want to give you an update on herbal life. bouncing back a little bit. they are going on the aggressive as i know you guys know. if you're just joining us on cnbc herbal life has hired david boys's law firm. investment banking firm. they have a january 10th analyst
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day. they're accelerating a stock buy back program. they are not taking bill ackman's claims lying down. this is an all and out stock brawl now over herbalife. although the stock has been whacked the last couple of weeks. it is coming back just under a 6% gain. >> when we come back, bernie madoff writing to our own scott cohn from prison. find out what he had to say. first, rick santelli's working on something for a little bit later on. rick. >> yes. about exactly 600 seconds from now to be precise we're going to have harry clark. let's see, he's the president, the ceo, the founder of clark capitol management. we're going to talk tow him about the fcc. n no, not what's about in the airways. the fiscal cliff conditions. have we talked too much about them? no. come back in 600 seconds. i got mine in iraq, 2003.
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2012 has been a year of change for the banking sector, but that might not end in 2013. kayla talgie has a look at what may lie ahead. >> reporter: after a year's long identity crisis, 2013 will be a state of bank makeovers. barclays will spin off its investment bank. bank of america will review options for merrill lynch. behind these walls citigroup's investment bank will shrink
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considerable blil focusing on top traders and deal makers. if that deal market returns as well as valuations, citi could send all of its kraush sis bad banks holdings. expect a lot of face time with media and investor for mike cavanau cavanaugh, the new ceo of investment bank and not so dark horse to succeed dimon. the consumer financial protection view will crackdown on overdraft fees. with the help of the fed's two key facets of dodd frank will reach the finish line. the regulation of the trillion dollar derivatives industry will finish. if either of these hurt competition abroad, expect banks to sue. this christmas eve cnbc got
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a letter from one bernie madoff. in it he offered the gift of some insight into insider trading. senior correspondent scott cohn joins us on the phone. good morning. >> good morning, karl. bernie madoff has time on his hands. now he spends time communicating with a handful of us off the record. he made a rare exception on christmas eve in an on the record letter that does not address his own situation but he talks about the challenges he sees for regulators. dark pools. those off exchange trading regulations that create a lack of transparency in the markets and turn inside information into gold. the more secret this information, he writes, the more valuable it is to those that can obtain it. therein lies the problem. to that point, madoff has been clearly following white collar crime since his arrest four years ago. he writes, although one would be led to believe that with the
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recent spate of insider trading prosecutions that insider trading is a new development, this is false. it's been present in the market forever but rarely prosecuted. the same can be said of front running of organizations. madoff led a lot of the groups. it's been this additional layer of cost that has created the need for more risk to be taken to earn worth while returns. this has created a mine field of regulatory problems involving the very reason that the desire for a lack of transparency has grown. so does he have a point? well, we put the entire letter on cnbc.k078 and we invite you to weigh in there and on twitter. carl. >>s ago the recipient of one of these letters, i'm curious with your own response. a response on social media is why do we care? does he have any credibility? >> you know, it's a fair point
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and it's one that we thought of as well, but bernie madoff, for all of his crimes, was also once a big player on wall street and helped set up a lot of the systems that are in place today with the markets. so he knows where the bodies are buried. he knows the markets when he sees them. obviously you take it all with a grain of salt but we put it out there for everyone to evaluate. >> yeah, they can make of it what they will. certainly provocative, scott. thanks so much. >> my pleasure. scott cohn. it's turning out to be a less than happy holiday for retailers. even those who are spending we'll find out where they did it. we'll be right back. [ male announcer ] you are a business pro.
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well the come back to the third hour, "squawk on the street." i'd like to welcome my guest terry clark of clark capitol management. harry, thanks for being on the show the day after christmas. >> you're welcome. >> i read something you wrote a few days back. i'll paraphrase. you said, i wouldn't be
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surprised to see a huge selloff after a fiscal cliff deal is reached. sell the news. pretty much i'm on a trading floor where selling the news is just kind of second nature. that's the way these folks operate. even with the reduced expectations of reform attached to the solution of the fiscal cliff, do you still feel the same way? >> rick, our cycle studies are pointing down pretty heavily right now, so no matter what happens, i look for a selloff of some sort. i think we may get some silly, small deal done which won't make any difference long term. we need to go over the cliff. we have to go over the cliff to get the real reform done early next year. if we don't get reform done early next year, it's going to be bad because consumers will stop spending and they are 70% of the u.s.gdp. they're 15% of the worldwide gdp. we have the cliff and it's not resolved pretty quickly in a real meaningful way, it will put the world in a recession in my
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opinion. >> now, harry -- you are pretty much talking about the equities. let's change gears a little bit. let's go to the fixed income market. do you suspect on some type of solution to the fiscal cliff, albeit a very much smaller, reduced type package, that the markets whether we're talking corporate bonds, junk bonds, treasuries, do you think they'll have any sizeable move? >> no. maybe only down in price, up in yield. rick, we've had a 32 bull market in the bonds which has ended. we'll have maybe another year, year and a half of large sideways motions that integrates with large swings. if rates go up 1%, a long-term bond fund drops 20%. 2% it drops 40%. bonds are the next disaster awaiting the public in this country. $900 billion in the bond market -- >> let me interrupt you, harry. i completely agree with you, actually. there's a lot of ways that we can have a market reversal from
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the 32-year bull run pushing up prices and down rates. for example, those out there that think, okay, if i sell treasuries as mr. clark is talking, i'm going to have a pay day beyond my wildest dreams, but my opinion is even though i think there's a huge move out there, i think what we're going to see in the near term is that we might not see a test of the 1.38 all time low closing yield. >> true. >> but i think we're going to hover below 2% for all if not most of 2013. would you disagree with that? >> yes. rick, i think the next stop is 241 on the ten year sometime in 2013. now that's a 1% increase in the low which will make bond funds have a decent decline in value. if you look at high yield bonds, i'll mention a bond, no name, 1999 and all of dividends taken out is still down 24% in
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principle over the last 13 years. you can't buy bonds, forget about them anymore, especially in the environment i expect to see over the next several years. bonds are going to be in relegated to the -- i don't want to say trash. >> harry, we have to go. we're short on time here, but i want to ask you back towards the end of the year, 2013, because i still am convinced that even though you might not test all-time highs, i don't think you'll make a huge pass to new extreme lows. great having you. >> i don't either. thank you. thank you now. a lot of tv between now and then, that's for sure, rick. thanks a lot. crude oil seeing a big spike higher today. up next we'll head to the nymex seeing what's behind the 2% inbe crease. dow down 34. back in a minute. male announcer] don't have the hops for hoops with your buddies? lost your appetite for romance? and your mood is on its way down. you might not just be getting older. you might have a treatable condition
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a couple hours into trading. a couple of the stories we're squawking about. j.d. u.s.a. is one of the biggest gainers in the u.s.a. after piper jaf ri moved up from 16 to 12 and reaffirms its overweight rating. the winter storm hitting the central u.s. and now hitting the east causing havoc for holiday travelers. there's been over 1200 flight cancellations due to the storm and that number is expected to rise. u.s. home prices kicking down while a trend shows time
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for recovery. the s&p case-shiller shows a decrease in october. 20 cities saw a decrease. 12 saw lower prices in october. let's get a check on energy and commodities. berth that coombs is live today. >> we've seen some real resilience here in terms of this morning's move to the outside. it's faded in terms of stocks particularly with the somewhat downbeat case-shiller report. consumer slowing down in spending for the holidays. we got a bit of a spark this morning with the news of the president returning early to resume talks with congress to try to avert the fiscal cliff and then it turned into a bit of a technical rally. we topped $91 for the first time in two months, and that's provided some strength. it's the wti nymex that is leading the rest of the complex. you have a little bit of risk premium in there. report of an arrest of a terror cell in the united arab
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emirates. take a look. it's this hope of things resuming here. also for stimulus in china. that translates to the industrial metals in particular. they are strong today in terms of copper. gold doesn't do so well these days, carl, when you get any sense of progress with the possibility of resolving the fiscal cliff. back to you. >> yes. speaking of which, bertha, john harwood is tweeting there doesn't appear to be any, as he puts it, christmas spirit progress. white house officials telling him no. we'll take that for what it's worth. bob passani is here with the other piece of bad news. that was the retail numbers. >> yeah. that master card spending pulse number, christmas sales only up 0.7%. this is a survey of master card users. i want to counterplay against that a little bit. you can see the effects. a lot of big retailers down 2
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and 3%. we had the head of the national retail federation on. they estimate sales will be up 4%. a little bit of a difference of opinion on how things are going to play out. i just want to point out that retailers have had a fantastic run this year. the retail index, the rlx, if you can put that up, hit an historic high, historic high. right here, that was december 3rd. we're off of that high but only about 5%. on the year they're still outperforming everything else. take a look at the retailers on the year. we've had some big, big numbers from some of the retailers gap, tjx, target, macy's. all double digit gains. if you put up the retail index versus the s&p five, you'll see it's up 25% as a group all throughout the year. there's the retailers, here's the s&p 500. the retailers were outperform
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the s&p 500 for the fifth straight year. i predict it will. bottom line, i'm not saying there as not problems, but the numbers have been excellent. by the way, if you think the consumer is gone, take a look at the airline index. it hit a new high. today i.s.i. said holiday bookings, commercial amitriptyline and residential, individuals, were remaining on the strong side. new high for the airline index. finally, how to play japan. very interesting comments today about japan near 52-week high on the index. here's one way to play it, the ewj and simon hobbs, you don't get the benefit of any moves in the currency. you get exposed to the currency. as the yen weakens as it's been that way, you have to account for that. there are ways around that. there are atfs that try to take out the currency plays. i want to put this up. what this does is it takes into account currency fluctuations and it tries to hedge against it
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so you only get a pure play on japanese stocks. you notice this has been moving up. let me do a comparison chart to show you that it does make a difference. if you do a comparison between the ewj here and this one that hedges on currency, you'll see it's been outperforming. this has been happening as the yen has been weakening. so believe it or not, carl, there are ways that you can hedge out some of this risk using etfs with very, very little effort. it used to be complicated. now there are etfs that will help hedge you out some of those prob zblems things investors could not have done. >> could have done but would have exposed the currency market. it was very difficult to hedge. all right, bob. thanks so much. bob passani still nursing a little bit of a sore throat. he's a tooper. let's get to the retailers. >> this is an unbelievable stat. not news based. i like stats. right now 16 of the 17 worst
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performers in the s&p 500 are retailers. you've got coach is the single worst performer. tell labs the second worth performer and is the only nonretailer in that worst 17 names. you've got sears, raffle lauren, the gap, macy's, office depot. a number more. we talk about concern about fiscal cliff, weather. you know, rabid wolverine. whatever the issue is, retailers getting absolutely walloped today, although most of these names are still significantly higher on the year. not a good day for the retailers. >> no. it's amazing how many lead the loser board. five days until we look over the very sharp edge of the fiscal cliff. so far this is about the level of consensus that we've reached. >> the fiscal cliff, yes, it is still looming if you're out there wondering. >> i think we could be taken to the brink again. >> the market is now responding
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to the pending fiscal cliff. >> business has stopped investing. business has stopped spending. business has stopped hiring. >> nobody knows what's going to happen. there's outlandish guesses on both sides. >> it wouldn't surprise me if we go baas january 1st. >> you can't tax your way out of this. you can't cut spending your way out of this. you can't grow your way out of this. >> another 2 million people will lose their jobs. unemployment will go to over 9%. why would you do that? >> president obama is meeting with high profile chief executive officers today. >> we don't legislate but we know a lot about the consequences of failing to reach an agreement. >> we're here to support putting america back to work. >> we have to make sure that taxes don't go up on middle class families, that we're creating jobs. >> it's time for the president and democrats to get serious about the spending problem that our country has. >> is the administration prepared to go over the fiscal cliff? >> oh, absolutely. >> how about we stop all the press conferences, statements,
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speeches. stop the personal and political attacks. >> people have a lot of different views. i'm willing to compromise a little bit. >> the president keeps opening doors for the speaker to go through and the action that the speaker announced, he is slamming the door in the president's face. >> time is running short. i'm going to do everything i can to protect as many americans from an increase in taxes as i can. >> are you guys just incompetent or what? i mean, if you can't do this, if you can't do what the american people pay you to do, why don't you just step aside and put somebody in there that actually can get a deal done. >> we are one decision away from restoring our fiscal and our moral authority around the world. let's just do it. >> is jpmorgan taking any steps in preparation? >> we're praying. >> call me a hopeless optimist, but i actually still think we can get it done. and with all of that, john harwood joins us this morning from washington with the latest developments, if there can be any with congress on vacation.
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john, good morning to you. >> good morning. >> we know the president's going to give up some rounds of golf, some surfing as he makes his way back to d.c. what does that mean as of this moment? >> it means that we've only got a few days left and he's going to do whatever he can and have the american people see him doing whatever he can to try to close the gap with republicans and make a deal, at least a mini deal to get over this potential crisis that we have in terms of confidence and the american government's ability to function well and in our economy to be able to avoid another recession, but i've got to tell you, all the signs -- i've been like jamie dimon, a hopeless optimist that assuming it's going to get done, i still think the chances are decent that something will get done at least on a temporary basis. but the house has not gotten their 48-hour notice for members to come back and legislate. i had an exchange with the senior white house official this
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morning and said, is there any progress, signals, anything that points towards progress toward a mini deal over the last couple of days as we've experienced christmas, and the answer was one word, no. >> when did -- i mean, you point out your optimism, john. when did that begin to fray? i assume it was a lot of the plan b. is all of the attention turned to senator reed? >> senator reed and senator mcconnell. the collapse of plan b probably made a deal more likely rather than less likely because it undercut the republican negotiating position, increased pressure on him to put something on the floor to pass with democratic votes as well as republican votes, but the first step has got to take place in the senate. democrats are theepg senator mcconnell either overtly or quietly by not trying to stop it in using all of the levers of power that the minority has in
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the senate will permit a temporary deal that would extend unemployment benefits, take care of the fix temporarily that would extend tax cuts for everybody under $250,000 temporarily and turn off the see quester, but we have to wait and see what happens when the president gets back tomorrow, when the senate gets back tomorrow and see if they can make some progress. if they can, the house can act pretty quickly. we haven't seen it yet. >> john, we've got to run, but procedurally if a trader is out there waiting to know if house members will be kamtd back, do we have to ferret that out? >> no. that is not a big secret because once the house gets called back, that news gets out there in a hurry. you have 435 members and all their staffs making arrangements for this to happen. so that's not going to be difficult to figure out. >> all right. we'll see when and if, john. thank you so much. john harwood in washington. for some insight on how to position your portfolio amid
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this mess, mark luschini is chief investment officer joining us from pittsburgh this morning. mark, welcome back. good to see you. >> thanks. you've turn fiscal cliff into a verb meaning do you or do you not fiscal cliff your portfolio. i'm guessing you don't think it's in general a smart idea? >> i think it's difficult to time any event, let alone something like this, particularly when politics is involved. it's quite fashionable to be handicapping what if anything is going to be done, a grand bargain, a downpayment, whatever you want to define it as. at the end of the day the underlying fundamentals of the united states look relatively decent to us. we ultimately think the fiscal cliff will be rendered into a slope and as a consequence one needs to remain equitized because they remain undemanding. in the event you do get some solution, i think they're primed to continue to advance. >> let's pretend for a moment
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that we don't. we go through the new year. we go through the first week, still nothing, still nothing. there will be a line, mark, won't there where companies start to make cuts in advance of what they pretty much know will be a decline in consumer demand? >> i think you're right, carl. we saw evidence of that really earlier this year. core cap of goods orders declined for the first two quarters. it's only in the last two months where you've had a positive uptick in the activity. i think what we see is a reversion back to what we had over the summer and once ceo's whose confidence is declining play things closer to the vest and as a result that paralyzed level of activity will translate into con suchblgs, lack of hiring, lack of business investment, collectively supporting us moving towards an economic contraction instead of expansion. >> yeah. so at what point would you be prodded into rotating? i'm guessing here into some
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classically defensive sectors? would you be moving some money at some point into utilities? the only sector this year that is going to end the year probably in the red. >> i'd still be reluctant to do that, carl, because the fact is value wagtations like telecommunications, utilities are quite rich. what i'd be more inclined to do is continue to pivot months into nonu.s. equities, those being in europe, china, and japan which we turned actually quite constructive on a couple of weeks ago that shin zu zu abbe going to be the prime minister. finally, everybody has the same goal and that is to try to make as much money in this uncertainty or lose as little money as possible. i mean, can you recall a time where it's been this difficult to sort of model your strategy
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given how little we know out of d.c.? >> that's the problem. i mean, we can certainly play the forecasting game as well as anybody in terms of looking at economic fundme mmenfundamental. handicapping politics is an exercise in few timpt as a consequence one has to stay equitized in the event that something goes right and the same time the prudence no how you're allocating capitol, then equities would come under pressure which may be opportu opportunistic but at levels lower than what we're seeing today. >> they're not making it easy on us by any stretch. mark, thanks a lot. >> no. thank you, carl. >> mark over at jne. straight ahead, an update on the winter storm in the northeast and what it means if you're traveling over the holiday. we'll be right back. let's give thanks -
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for an idea. a grand idea called america. the idea that if you work hard, if you have a dream, if you work with your neighbors... you can do most anything. this led to other ideas like liberty and rock 'n' roll. to free markets, free enterprise, and free refills. it put a man on the moon and a phone in your pocket. our country's gone through a lot over the centuries and a half. but this idea isn't fragile. when times get tough, it rallies us as one. every day, more people believe in the american idea and when they do, the dream comes true. we're grateful to be a part of it.
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coming up next on the halftime report, turn 2013 into your lucky year. former staples ceo tom stenberg on which retail stocks you should buy on today's dip. finally, one stock on today's opinion. we go head to head on one of this year's talked about stocks. carl, we'll see you in 12 minutes or so. >> see you then, scott. winter storm is barrelling across the u.s.
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it's causing problems for travelers. dave malkoff is in fishers, indiana, with the latest. hey, dave. >> reporter: hey, carl. you came to us at the right time. this is starting to deteriorate on the ground. we'll get you a live reading of exactly how fast these winds are blowing. i'm talking 17, 18, we're at 15, 21-mile-an-hour. that was just a 21-mile-an-hour gust. we're seeing gusts of up to 25 miles an hour. what i'm going to do here is walk back a little bit so you can see what the visibility looks like. that is what these folks on the roadway are dealing with as you move back. you're not going to be able to see me because there's so much wind blowing this snow around making it very dangerous for travelers here on i-69. the airport is seeing an almost shutdown with 144 flights canceled out of here and we're seeing about the same thing at
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airports across the region. so you know what that means for travel, people are going to be stuck, carl, right? >> you've got that right, especially in this part of the country, dave. get back in the truck and stay warm. dave malkoff. >> right there. >> over in indiana. christmas may be over, but retailers are still taking advantage of the shopping season. we'll find out which retailer was the most popular with shoppers and if that means you should be investing in the company when we come right back. >> announcer: the cnbc real time exchange snapshot is brought to you by interactive brokers. when you have diabetes >> announcer: >> announcer: interactive brokers, the professional's gate way into the markets. they have carb steady, with carbs that digest slowly to help minimize blood sugar spikes. [ male announcer ] glucerna hunger smart.
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despite the overall slowdown in retail sales, online shopping still on the rise this holiday season, but which retailers did online shoppers frequent the most? expeer onmarketing services provides data and analytics to more than 10,000 companies around the world and their managing director of global research joins us from san francisco with some of the most popular retailers. bill, good morning. >> good morning. >> let's walk through the top ten because, i mean, a lot of the ones that are number one, number two this year were in a
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similar position last year. we have seen some movement in the list. walk us through the top ten. >> as you said, we're seeing pretty much the same retailers in the top five. it's amazon, walmart, target, best buy, jcpenney. there has been a little bit of movement towards the bottom, but relatively stable. i think the big story here is of those top ten, the majority of them saw a big increase in visits this last week compared to the previous year. this kind of goes against what we've been hearing in the news today about decline in consumer spending this holiday season. i think what we're actually seeing when we look at our data is a shift from bricks and mortar spending to visits online and more online spending as consumers are looking for the best possible priegs thce this y season. >> what would explain the decrease this past week? >> the decrease -- we saw a decrease of about 9% looking at traffic to our experian retail
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500 but when we compared this last week to last year we're seeing a 16% increase over last year. i think what we're seeing in consumer behavior, if you want to understand what's happening in retail, one of the best ways is to look at online behavior, how consumers are searching and what we're seeing is a delay in spending as consumers are waiting for the best possible discounts. what we have here, i think, is a discount driven economy. consumers are looking for the best possible prices. we look at search term data, i analyzed about 1.2 million search terms over the last week to the top retail 500. there's been about a 48% increase in searches that contain percent off or discount. that's a clear indication that consumers are really waiting for the best possible price. >> in terms of most searched products, you would expect, i don't know, an ipad, maybe a kindle fire, but uggs tops the
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list 2308d by the fire and by the ipad. barbie, ipad mini. does uggs come as a surprise or is this always the case? >> it comes as a surprise to me every year over the last seven years. it was the numb one last year. it was a bit of a surprise to me this year because we've heard some news from decker that there was a decrease in ugs sales. ugs are a late fourth quarter product. out of 1.2 million search terms, it was the number one searched product so that i think indicates that we'll probably see a little bit of a bump of sales in ugs this holiday season. >> interesting. finally, you point out that home depot and lowe's did have top ten slots earlier in the season. looks like they got could opted by among others qvc which says a lot about their model. >> we saw a big push for least
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and home depot. we think part of that was a sandy effect as people were stocking up before the storm and also buying materials after the storm. it's also a factor of people more interested in home improvement this year the other interesting one is qvc. it's multichannel retail. what i mean is consumers are not buying online. they're using every conceivable channel. we're helping our clients navigate through that multi-channel experience. they're going to the bricks and mortar stores to use their mobile devices and find the best possible price. >> great stuff, bill. thank you for that. >> bill over at experian. a lot more "squawk on the a lot more "squawk on the street" in just a minute.
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